Women-Led Businesses: The Underserved Opportunity - SXSW 2014

Today I sat in on a panel discussion called Women Led Businesses: The Underserved Opportunity, moderated by Joshua Henderson, VP, Springboard Enterprises. Panelists included Trish Costello, founder of Portfolia and co-founder of the Kauffman Fellows program, Adam Quinton, Founder of Lucas Point Ventures and Lauren Flanagan, Managing Director of BELLE Capital USA.

Henderson started off the panel by framing the conversation around the market opportunity of women-led businesses for investors, rather than focus on why women weren't getting funding. All investors on the panel agreed that they invest in companies for the financial return, but Costello was quick to point out that if women green-lined the companies and products they wanted to see in the market, and invested in them - we'd see a huge shift in the world. "Even though I'm investing for a financial return - I'm also investing in women-led companies so we can create the world we want." says Costello.

"Female-run, early stage, post accelerator enterprises are 15% more likely to be profitable than male-run businesses. Even though they are 40% less likely to be funded." - Source: Peter Roberts, Emory University

Flanagan stated that women-led companies are doing just as well as their male counterparts but on a 1/3 less capital. The funds go further and the companies tend to fail less. Capital efficiency is really important and seems to be a common thread among female-led companies. "Women like to work in teams and collaboration is now a key competitive advantage." she says.At BELLE Capital, they take a moneyball approach. They love home runs but consistent doubles and triples are what they really look for.

Costello backs this up by saying "We've seen number of companies where there are only men on the exec team - and they always burn through more money and have to pivot more often. Women see the context of the business a bit better and we'll be seeing a much more emphasis on capital efficiency soon. Traditional VCs are often ego-driven men who are looking for 10x return and I believe women investors will be making sensible investments with sensible returns."

Costello goes on to say that investors should be looking for high-value, scalable companies that can make a global impact and they'll find an untapped pool of them in the women-led market. "Over a third of all companies are consumer facing- and that's where women play and thrive. There is a huge movement in the space and traditional investors don't know much about it. The opportunity for women to make a big splash in hot tech and other consumer facing innovations are huge."

An overarching theme that was brought up by Quinton, was the issue of diversity. Working with a lot of startups, Quinton states that his hardest working and most determined founders are in fact women. He goes on to state the even in homogenous teams of all men and all women, his all women teams fair better and fail less than their counterparts.

The panel was asked how they plan on tackling the issue of women giving large sums philanthropically but hesitant to use a portion of that money to invest in startups. Costello thinks the best way is to lead women who are passionate about a cause to invest in companies that are trying to innovate in the space. "It has less friction for them and gets their feet wet."

Flanagan added that it was 'fear of losing' that we need to tackle. If they give a $1,000,000 to a charity, or a $100,000 to a startup - the impact of loss is greater with the investment. She believes we need to do some work in this area to change that mindset.

The overall takeaways from the panel discussion were 1) diversity on founder teams leads to better results and less failure 2) development and education of women investors to invest in women-led companies is key and 3) consumer facing products and tech are going to be massive for women founders.

Flanagan states, "There is a global awakening for women happening right now. We are realizing that we are the solution to our own problems. It's our responsibility to figure this out."